Why “nudge” is more often than not a socially conservative idea

by on October 10, 2017 at 1:30 am in Current Affairs, Economics | Permalink

That is the topic of my latest Bloomberg column, on Thaler and Sunstein, here is one excerpt:

There is a common pattern here: Society is unwilling to resort to outright, direct coercion either to keep people married or to keep them from immigrating illegally. We don’t in fact have the resources to do that, nor would we be willing to stomach the required violence. Conservative social policy is thus reborn in the form of a nudge, because that’s what restrictions look like in a violence-averse society.

An especially controversial conservative nudge is all the policy steps and regulatory restrictions and funding cuts that make it harder for women to get abortions. Many Americans must now travel a considerable distance to reach a qualified abortion provider, in some cases hundreds of miles. The cost is discouraging. And the greater inconvenience widens the gap of time between decision and final outcome, perhaps inducing some women to change their minds or simply let the plan go unfulfilled. Yet it is still possible to get an abortion, albeit with greater effort.

And:

I find it striking that nudge theorists usually market the idea using relatively “liberal” examples, such as improving public services. How much we view nudge as freedom-enhancing or as a sinister manipulation may depend on the context in which the nudge is placed. Neither conservatives nor liberals should be so quick to condemn or approve of nudge per se.

Do read the whole thing.

1 Anon7 October 10, 2017 at 2:12 am

If you recast regulations and taxes/subsidies as just forms of a “nudge,” what makes a “nudge” new and different?

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2 Ray Lopez October 10, 2017 at 3:26 am

I think “nudge” is conservatives acting as American liberals but pretending to be more conservative than the liberals. In fact, ‘nudge’ is just state coercion, but milder than say a Bernie Sanders mandate.

At the end of the day, “nudge” is what you get when the economy stops growing due to lack of innovation due to lack of good patent incentives, and you are left with rearranging the economic pie rather than making it bigger. But it’s OK, me and mine are in the 1%, we’ll get by.

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3 MMK October 10, 2017 at 8:34 am

How does eating too many twinkies, getting fat and increasing the public burden via medical care expenses lead to innovation? What is the downside of nudging people away from this behavior?

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4 albatross October 10, 2017 at 8:41 am

I imagine it creates more innovation in fad diets, so that’s something.

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5 Brian Donohue October 10, 2017 at 8:52 am

The point is that we are relentlessly nudged all the time. Isn’t that what marketing is? Basically every commercial you see?

The idea that nudges are just some odious government policy is ridiculous.

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6 IVV October 10, 2017 at 5:25 pm

The downside? I can’t sell you as many Twinkies, anymore.

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7 Anonymous October 10, 2017 at 3:59 am

My understanding is that a “nudge” is something people can opt out from. It is only the default option and most people are too lazy or disinterested to change it.

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8 Brian Donohue October 10, 2017 at 8:50 am

My understanding is that if the decision has meaningful repercussions, the person is not disinterested. Uninterested, maybe.

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9 anon October 10, 2017 at 10:33 am

I think the formal definition of a nudge allows no coercion, only structure to an open choice .. “Choice architecture”

But in the spirit of Tyler’s post I can think of a few things that are loosely nudges for greater freedom.

1. In my area all traffic patrols are done in black and whites, with light bars on top. Why? They could catch many more speeders with unmarked highway patrol cars. My guess is that the black and whites nudge us, by being visible, but also nudge the officers. We don’t make it easy for them. Thus average highway speed is speed limit plus 7.

2. Medical marijuana was a very effective nudge toward freer drug use.

3. Net neutrality. Some conservatives may hate this one, but they are “wrong sided” in my opinion. A fundamental rule that no one may restrict packets between any two points is a fundamental protection for free speech. It is the antithesis of a Great Firewall.

More?

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10 anon October 10, 2017 at 10:47 am

4. That charitable contributions are tax deductible is a big nudge (in the loose sense) toward nongovernmental solutions to social problems.

Heh, might be why I think is is confusing to the average voter, and that true charity should be made with after tax dollars.

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11 Thomas October 10, 2017 at 10:56 am

“A fundamental rule that no one may restrict packets between any two points is a fundamental protection for free speech.”

So when Youtube restricts packets between their servers and their customer’s computers based on the content of the packets, you would find that to be a violation of free speech? What about when TC moderates this website and restricts certain people’s packets from reaching our computers?

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12 anon October 10, 2017 at 11:08 am

What a dumb answer. Are you actually proud of it?

13 Anon7 October 10, 2017 at 5:16 pm

Do TC’s examples of illegal immigration and abortion really fit into that definition of nudge (which is also my understanding of the concept)?

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14 Dick the Butcher October 10, 2017 at 7:49 am

How about them Yankees!

Likely nudges are counter-productive to someone.

“. . . all the policy steps and regulatory restrictions and funding cuts that make it harder for women to get abortions.” In my case, replace “abortions” with “machine guns.”

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15 MMK October 10, 2017 at 8:34 am

Indians playing on Columbus Day. Never had a chance.

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16 msgkings October 10, 2017 at 11:53 am

Ha! Outstanding.

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17 msgkings October 10, 2017 at 11:54 am

Yep. Lots of nudges in place to make it harder to get machine guns. You say it like it’s a bad thing.

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18 anon October 10, 2017 at 12:09 pm

That is way too far afield from nudging. To legally buy a machine gun “you must obtain approval from the ATF, obtain a signature from the Chief Law Enforcement Officer (CLEO) who is the county sheriff or city or town chief of police (not necessarily permission), pass an extensive background check to include submitting a photograph and fingerprints, fully register the firearm, receive ATF written permission before moving the firearm across state lines, and pay a tax.”

A proper Nudge in Thaler’s sense, does not put limits on choice.

Thaler doesn’t even like soda size restrictions, thinks they are too onerous to be considered Nudges.

https://twitter.com/R_Thaler/status/208273339507150849

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19 msgkings October 10, 2017 at 12:37 pm

OK fair enough. Below I do state that added costs are not nudges.

20 Steve Sailer October 10, 2017 at 2:13 am

I was in charge of setting up new personal computers for the company where I worked in 1986-88. One of the things we did before delivering them to the new user was set defaults to the most likely optimal settings so that new PC users had to worry about fewer things. Today, however, most PCs come with the default settings reasonably optimized for users.

Is this an example of Nudge?

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21 Ray Lopez October 10, 2017 at 3:32 am

No. That’s too narrow a focus. Nudge is like when your employer on your first day of work automatically deducts something from your paycheck to pay for your retirement, unless you opt out. And that something is in company stock, which sometimes is the worse investment you can make (lack of diversification outside the industry you work in) but often everybody (including some very smart people) make that mistake. (biggest example was: ex-jock Brazilian investor Eike Batista lost about 35 billion USD in 1.5 years, as he was leveraged and un-diversified, today worth negative $1B, though he has some options that might make him rich someday).

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22 msgkings October 10, 2017 at 11:55 am

In opt-out retirement plans like you describe it is illegal to invest the funds in company stock.

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23 mulp October 10, 2017 at 5:32 pm

But that is merely a nudge.

Most employers with automatic contributions to 401Ks also have automatic stock purchase plans so you can opt into putting all your investments in one basket by eliminating the 401K contribution and going with the tax incentivized stock purchase plan, sometimes including explicit employer match in addition to the implied employer match by tax cut on a win-win implied stock option.

I saved more in an employee stock purchase plan than in a 401k at the same approximate rate because the stock plan already existed in 1974 and I became eligible Q1 1976, but the 401K didn’t exist as broadly for more than a decade later.

Folklore in the 70s, 80s, and 90s was employee stock purchase created lots of millionaire workers. Not many talk of 401K millionaires.

Because I had forced sales of both my stock and 401K, my returns on both ended up being nominal interest plus inflation, ie, I would have done as well buying US Treasury TIPS if they had existed. Tax deferred savings are restricted on when and how you can trade tax deferred, while employers can force sales, ie in merger, job cuts, plan changes.

And Congress gets to Trump it all. The GOP has been advocating implicit tax changes that will increase tax rates on deferred tax income over the tax rates in effect for many heavy saving (low to mid income) workers when taxes were deferred.

If you are earning a low income and paying a marginal rate of 15% should you save a lot tax deffered and delay retirement until you must take distributions that result in half or more of Social Security benefit being taxed which when added to forced distribution results in a 20% or higher marginal tax rate?

In retrospect, my savings after taxes were much more valuable later because I spent them without thinking about, or paying taxes. I believe I was nudged into savings that have been worse for me.

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24 JCC October 10, 2017 at 6:26 am

Kind of, it’s a form of choice architecture.

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25 Steve Sailer October 10, 2017 at 8:25 am

So, is “nudge” a new Nobel-worthy idea? It seemed pretty self-evident to me 30 years ago.

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26 Brian Donohue October 10, 2017 at 8:58 am

The one big practical success to date is increased retirement savings behavior. This is the example everyone points to, and I’m not sure how well the experience generalizes to other domains, but it looks like a pretty meaningful impact by itself. I agree the idea isn’t rocket science, but sometimes things like this are more obvious after someone like Thaler has unpacked it properly.

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27 Steve Sailer October 10, 2017 at 9:10 am

I didn’t have all that much trouble in 1986 persuading my bosses that they needed to pay to have me and my two underlings optimize the initial settings on personal computers: they grasped the idea quickly when I explained it to them, and they didn’t seem to see it as a Nobel-worthy breakthrough on my part.

Of course, I didn’t call it “nudge,” a word that seems peculiarly effective at outraging people for some reason. We just called it “setting up.”

28 msgkings October 10, 2017 at 11:58 am

That’s not a nudge. That’s marketing your skills to get paid to do something useful. As Brian describes, a nudge is simply making a default setting (that you can opt out of) something the setter believes is beneficial for you. In your anecdote, the nudge is what is presented to the users of the systems you optimized. The bosses paid you to create the nudge.

29 derek October 10, 2017 at 9:33 am

Partly. The wannabe social engineers see it this way. Something like income tax deductions on your paycheck.

As with food guidelines, the problem is trust. The Dairy industry has lots of influence, so milk and cheese is part of the healthy list. Etc. Regulations or nudges are written by someone, and a nudge can make a market.

The best idea I’ve heard is some of the implementations in GB. Essentially they found that people were far more willing to do things if the government agents weren’t assholes.

Case in point. The Canadian Liberals are implementing a bunch of tax increases on small businesses, and they started their whole ‘conversation’ by calling them tax cheats. The instant reaction from lots of people I know, including accountants, is to figure out a way to go underground.

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30 Komori October 11, 2017 at 11:05 am

Do they really? I think the defaults are more optimized for the producer’s revenue streams. See all the tracking Microsoft has enabled by default (and many of which can’t even be disabled unless you’re running the Enterprise edition). Similar for smartphone OSes. All of which is so they can make money selling the information, not to benefit the end user.

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31 Someone October 10, 2017 at 2:28 am

Tyler, great article and your overall message makes sense to me.

Can you elaborate on how US immigration policy is a nudge? My understanding of nudge theory is that the all choices are legal but the state sets up the options so that some are more costly than others (where costs usually means psychological or behavioral “costs”). In the case of illegal immigration the state uses violence to detain and deport those that make the undesired choice. Enforcement might not be possible in all cases, but that’s true of all crimes to a certain extent.

If you think the current immigration policy is nudge-based what would a coercive policy look like?

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32 wiki October 10, 2017 at 11:49 am

If you think that immigration is not a nudge, you must think that we let over 3/4 of murderers get off scott free even when we have direct evidence of their committing the crime and even after they have been caught red-handed. And that the worst thing we do is release these murderers to another country outside our jurisdiction.

Never has a law favored by the majority of Americans been so routinely flouted by the powers that be as immigration enforcement has been.

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33 wiki October 10, 2017 at 11:50 am

What would a different response look like? Try Eisenhower and Bracero.

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34 Gary Lucas October 10, 2017 at 2:38 am

Another nice example of a nudge that is socially conservative is the requirement in some states that a woman who wants to have an abortion first have a sonogram or listen to a detailed description of the fetus. The rationale for these laws and the psychological mechanisms that they seek to exploit make them analogous in many ways to graphic warning labels on cigarettes that are used in some countries and that the Obama administration attempted to require in the U.S. before the courts intervened. See https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2150402 at pp.287-88.

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35 prior_test3 October 10, 2017 at 2:54 am

The sonogram costs money – it is intended to discourage women by increasing the cost a significant amount, both in time and money (in Virginia, for example, by needing to have the ultrasound done 24 hours ahead of the abortion). This is not the same as warning labels on packages, or even increasing tobacco taxes.

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36 albatross October 10, 2017 at 8:49 am

There are two things going on with the ultrasound/abortion thing. First, there’s an added hassle (including a rather intrusive and uncomfortable medical test), and second, there’s a kind of visual warning of the moral consequences of the abortion–here’s an actual baby with a detectable beating heart and developing brains, and you’re planning to kill it–are you sure this is what you want to do?

That’s a bit different from graphic safety warnings, because the ultrasound isn’t intended to tell the potential mother about safety risks of abortion, but rather about moral risks.

Imagine a world where animal rights and vegetarianism were a major force in American politics. The supreme court has ruled that meat eating is a protected right, and so can’t be banned. But the very powerful vegetarian lobby in California requires that you go take a personal tour of the slaughterhouse before you’re allowed to order that steak.

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37 Ricardo October 10, 2017 at 9:57 am

I think that sounds fantastic.

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38 Thomas October 10, 2017 at 11:02 am

Surely human fetuses have at least the moral standing of cows and so you support ultrasounds, dead fetus viewing, etc, correct? I mean, surely you don’t value cows higher than people, like some kind of potential Hitler, and surely you aren’t a massively mood affiliated hypocrite, right?

39 Ricardo October 10, 2017 at 12:44 pm

Right, exactly.

40 prior_test3 October 10, 2017 at 12:02 pm

You seem to have completely skipped the part about costs – both of the ultrasound itself, and in Virginia, the fact that you will need to schedule two appointments separated by at least 24 hours.

Both go considerably beyond ‘added hassle,’ being intentionally designed to discourage abortion through increasing its cost unnecessarily, regardless of what the woman thinks about viewing a picture of a fetus.

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41 Joe In Morgantown October 10, 2017 at 1:50 pm

Seeing ultrasounds of my kids made me more protective of them and less sympathetic to abortion in general.

Some expectant mothers may be unmoved, but I think you are wrong that most would be.

42 prior_test3 October 10, 2017 at 2:06 pm

Somehow, even though the costs involved in having to pay for an ultrasound exam and wait a mandatory 24 hours in Virginia have been repeatedly emphasized as intentional barriers, costs that negate any aspect of ‘nudge,’ people keep ignoring that reality.

If the unnecessary ultrasound procedure was voluntary, and did not cost the patient any money, one could start equating such regulations with safety warnings in general.

43 blah October 10, 2017 at 3:00 am

From the article: His major idea in “Nudge,” … is the most significant contribution to conservative thought in a generation.

Whoa. On the other hand, conservatives probably view all your examples as either common sense or a reluctant compromise, and distinguish them from forms that amount to *dishonest* psychological manipulation.

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44 blah October 10, 2017 at 3:00 am

“The most significant”. Not even with a “probably”.

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45 Mike October 10, 2017 at 3:17 am

@Tyler} ‘Neither conservatives nor liberals should be so quick to condemn or approve of nudge per se.’

… however, libertarians should instantly & fully condemn it.

Social Engineering in any form is not a proper nor productive function of government.

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46 Tom West October 10, 2017 at 8:12 am

Except that there is no “default” default.

There’s going to be a nudge is *some* direction. The only choice is where.

Not making a decision is simply making a decision in a non-transparent fashion.

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47 Hazel Meade October 10, 2017 at 11:50 am

Absent some sort of official government nudge, the nudges will come in the form of informal, socially constructed norms. Which IMO is the more libertarian solution. I’d rather have people be nudged by their friends and families than by a central political authority. Social norms can evolve in a self-organized fashion and change over time much more readily than laws can. The only counter-example I can think of is perhaps anti-discrimination laws, which basically is a massive government nudge to stop being prejudiced against people on the basis of race, ethnicity, religion, etc. If we didn’t have anti-discrimination laws, it might be more normative to be ethnically and religiously exclusive.

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48 TMC October 10, 2017 at 7:06 pm

” it might be more normative to be ethnically and religiously exclusive.”

As long no one is forcing you to do so, who cares? Anti-discrimination laws are not nudges, they come at a significant cost of freedom of association. Ask a Christian baker.

49 Brian Donohue October 10, 2017 at 8:44 am

Libertarians should be the most indifferent to nudges, since they’re more likely to assume people make rational choices which should not be influenced by defaults, framing etc.

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50 albatross October 10, 2017 at 8:54 am

I think there’s a kind of sliding scale somehow between nudges and substantial impediments to freedom of choice.

On one end: The menu shows water as the first option, iced tea as the second, and sodas at the end. It’s a very small nudge toward drinking the water.

On the other end: The menu shows only water and iced tea. By special arrangement, you may pre-order sodas a week in advance on the restaurant’s website.

You’re still allowed to drink soda in both cases, but it’s pretty clear that the second one is a lot more of an impediment to drinking soda than the first one.

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51 Brian Donohue October 10, 2017 at 9:05 am

I agree. But people have BS detectors and can sense when they are being played. Think of some offer from a company on a postcard: big red YES checkmark box on the left, sad little black and white NO checkmark box on the right. It must have worked once upon a time, and maybe it still does for some, but people grow more sophisticated in an arms-racey kind of way with clever marketers etc.

The end of the continuum is no choice, force. But as long as all the choices are there, and people feel like nothing important is being withheld or hidden, that nothing is fishy, I would think most libertarians would be fine with choice architecture.

52 Hazel Meade October 10, 2017 at 11:55 am

Brian, so if the choice is still allowed, but is simply very, very costly, then it’s not coercive? How does that differ from the “tax penalty” in the ACA or import tariffs?

53 msgkings October 10, 2017 at 12:02 pm

@Hazel: a tax/fee/penalty is not a nudge. Nudge is about framing choices and choosing defaults. The choices cost roughly the same, the nudge encourages ‘good behavior’ in the eyes of the nudger. If it costs more to do something else, that’s not a nudge.

54 Fabrizio Ghisellini October 10, 2017 at 3:12 am

This is a quote from Schubert (http://voxeu.org/article/note-ethics-nudges ) which shall be incorporated in my forthcoming book “Behavioral economics: moving forward”: “Consider a world with widespread adoption of public nudging. There, I, the consumer, don’t need to worry about my retirement savings, nor about mustering the little self-control that I have to avoid the chocolate bars in the cafeteria, nor about being wary about the tricks of door-to-door salespersons. In all these cases, some choice architect, somewhere behind the scenes, subtly steers me into the ‘right’ direction – by changing defaults and frames, and by implementing cooling-off periods. In other words, I’m outsourcing my choices to some external body. “

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55 Mike October 10, 2017 at 3:31 am

‘ …some choice architect, somewhere behind the scenes, subtly steers me into the ‘right’ direction…’

yup, that “choice architect” is the classic socialist principle

Nudge = Mild Socialism
(hard socialism always has a marketing problem in U.S. — gotta repackage it to disguise its real content)

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56 Anonymous October 10, 2017 at 4:11 am

You are always nudged one way or another. If the candy bars are readily available in the cafe, the cafeteria is nudging you towards eating them because that’s how they make money. If someone forces them to put them in a less obvious location, you are nudged towards not eating them.

In most things people don’t have any strong hard coded preference that “the socialists” are trying to suppress. In most things we just collect stimuli from the environment and subconsciously act according to it. The stimuli can be adjusted to work for our best interest or someone else’s or it can be random. None of these choices is more “socialist” than the others. There always is a “choice architect”. If one is not directly appointed, it is whoever has the most to gain by changing your behaviour. Usually someone who is trying to sell you something.

In the cases you really know what you are doing and want to have things your way, you are free to ignore the nudge and do whatever you want. That is the whole point.

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57 prior_test3 October 10, 2017 at 5:40 am

In the long run, we are all nudged?

Seems a matter of definition again, to be honest. Or the lack thereof.

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58 anon October 10, 2017 at 10:41 am

Yup. Where there is a choice, there is an architecture. It may be put together without much thought, it may be designed to negatively deceive the “customer,” or it may be designed to benefit the “customer.”

If Mike wants us to believe “helping people is socialism,” he is yielding a lot of ground to socialism.

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59 Thomas October 10, 2017 at 11:04 am

“Nudge” is about government mandating the choice of presentation or default rather than the market. The difference is found in liberty.

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60 albatross October 10, 2017 at 9:00 am

This all sounds a lot better when you assume the choice architect has your interests, or maybe society’s interests, at heart. There’s not any reason at all to expect that to be true, though.

My employer has interests in my choices, but they may be quite different from my own. (An example Ray Lopez brought up earlier is what stocks to put in your retirement account–the company has a pretty big incentive to “helpfully” make the default company stock.)

The state government has an interest in my choices, but again, they may be quite different from my interests or the interests of my community. And the people making decisions in the state government won’t have the same interests as the state government, either. Consider education–maybe the state government has a financial incentive in most college-bound students staying within the state university system instead of going out-of-state. (This supports their university system, and decreases the extra money needed by that system to keep the lights on.) But that may not actually be in the students’ interests–maybe a lot of those students would be better off looking at out-of-state schools.

Figuring out ways to structure the choices I’m offered to get me to choose the “right” way is probably going to be used 100x as often to push me toward choices that benefit the people structuring the choices, as it is to benefit me.

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61 Brian Donohue October 10, 2017 at 9:16 am

Ray’s company stock scenario ain’t what it used to be, mostly because of nudges from the legal system:

“A shift away from company stock holdings first observed in 2006 continued into 2016. Among plans offering company stock, the number of participants holding a concentrated position of more than 20% of their account balance fell from 32% in 2007 to 24% in 2016. In addition, the number of plans actively offering company stock to participants declined to 9% in 2016 from 11% in 2007. As a result, only 6% of all Vanguard
participants held concentrated company stock positions in 2016, compared with 12% at the end of 2007.”

https://pressroom.vanguard.com/nonindexed/How-America-Saves-2017.pdf

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62 msgkings October 10, 2017 at 12:04 pm

Not only that, but making the default investment for opt-out (‘nudge’) plans is not allowed.

63 msgkings October 10, 2017 at 12:05 pm

Sorry, making company stock the default investment is illegal

64 Li Zhi October 10, 2017 at 3:57 am

Wow.
We (our government) can’t keep people married?? Uh, marriage is a legal act, as is divorce. It would be easy to keep people married, simply remove any provision from our laws about divorce (and not recognizing divorces granted in other countries). Seems simple enough to me, even if there’s some Constitutional Right involved, a “simple” Amendment would do it. It is absolute rubbish to claim we “lack the resources” to do it.
And I STILL say that National Identity Cards and a RICO-like bounty on employers of illegals (perhaps with fast track citizenship) and mandatory 20 years for employers would do the trick. Lack the resources? I. Don’t. Think. So. I’m filing this under “Some of the least thought out comments TC has ever made.” (Not that I’m against divorce or increased (merit based) immigration.)

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65 Tom West October 10, 2017 at 8:22 am

> It is absolute rubbish to claim we “lack the resources” to do it.

Let’s not get too pedantic. Lack the resources is simply short-hand for “it cannot realistically be done”, and I think everyone understands that.

And, for better or for worse, if you believe that it *can* realistically be done, your views are so off the mainstream that Tyler probably feels no need to address your views in his choice of words.

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66 You Probrably Won't Respond October 10, 2017 at 9:26 am

Lack the resources is simply short-hand for “it cannot realistically be done”

Why can’t it realistically be done?

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67 The Other Jim October 10, 2017 at 8:23 am

+10.

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68 Kevin E. October 10, 2017 at 9:36 am

Tyler’s signalling, about both marriage and immigration. Thus, our current system of divorce and alimony/child support indentured servitude is considered “non-coercive” while the alternative of forcing people to uphold their vows by denying no-fault divorces is “more coercive.” The point about automatically expiring marriage licenses is meant to signal too that he doesn’t understand what marriage is or what the motivations for it are. In other words, that he’s another autistic economist. About immigration policy, he’s signalling that he sees the fact that the U.S. doesn’t have an open border policy not as an obvious feature of having a country which it has in common with every other country, but instead a “nudge.”

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69 Tanturn October 10, 2017 at 10:21 am

+1

The modern marriage and divorce system is much more coercive than it was pre-1950, and Tyler knows it.

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70 CHL October 10, 2017 at 4:37 am

“An especially controversial progressive nudge is all the policy steps and regulatory restrictions and funding cuts that make it harder for women to get guns. Many Americans must now travel a considerable distance to reach a licensed firearms dealer, in some cases hundreds of miles.”

Talking about California?

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71 Steve Sailer October 10, 2017 at 8:21 am

Los Angeles is full of gun shops.

In particular, the entertainment industry is full of gun nuts, such as Steven Spielberg, who treats himself to a six-figure handmade Italian shotgun after each movie he completes.

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72 Paraguayan October 10, 2017 at 10:55 am

Such is the social division in America. The rich shoot upland game birds, while the poor cower with barely legal M16 knockoffs.

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73 Matt Clements October 10, 2017 at 5:19 am

The whole point of a nudge is that it is small, e.g. presenting a default option for retirement saving that the individual may not bother to opt out of because of imperfections in perception or cognition. Some of the examples cited, like imposing greater distances that must be traveled in order to get an abortion, are not a nudge in this sense at all. They are, rather, an imposition of a significant cost. Granted, it is only a question of degree, but at some point the cost to the decision-maker is large enough that the example contradicts Thaler and Sunstein’s idea of offering encouragement without significantly restricting freedom.

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74 Beliavsky October 10, 2017 at 5:37 am

A “nudge” is often perceived as a “shove” or worse.

I oppose same-sex marriage as a “nudge” against homosexuality, since homosexuality is non-procreative and unhealthy, at least for men. But supporting that “nudge” is denounced as terrible bigotry in some quarters. Brendan Eich was fired from Mozilla for donating to a campaign for a referendum against same-sex marriage.

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75 Gil October 10, 2017 at 9:20 am

You seemed to have missed the definition of nudge. A nudge still allows people to make either choice.

I am not really seeing a close relationship between sex and marriage or procreation and marriage for that matter, so I guess if you want to nudge people away from non-procreative and unhealthy sex, you would would want to nudge something else.

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76 Kevin E. October 10, 2017 at 9:38 am

His point is that the sex is still legal, but the state shouldn’t bless it.

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77 Gil October 10, 2017 at 10:13 am

But a marriage license has nothing to do with sex. It is a legal arrangement that has to do with taxes, inheritance, hospital visitation, some stuff about children and some property rights.

My point it that prohibiting gay marriage is an awful fit for the notion of “nudge” as we are discussing. There is no individual choice involved and the claimed nudge has scant relationship to the desired outcome. So his larger point (nudges are often interpreted as shoves) is seriously weakened because the example given isn’t a nudge at all; it is a prohibition.

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78 Beliavsky October 10, 2017 at 11:20 am

“But a marriage license has nothing to do with sex.”

No. Traditionally, a marriage license has been the license to have sex, and non–marital sex was immoral and often illegal. Society has forbidden pairs of peole who should not be having sex, such as siblings, from getting married.

I don’t want the government putting homosexuals in jail, but people who opposed same-sex marriage intended it as a nudge against homosexuality. The courts deemed this nudge to be intolerable “animus”.

79 msgkings October 10, 2017 at 12:09 pm

Because it’s not a nudge, it’s a prohibition. Words have meanings, even when they are vague.

80 So Much For Subtlety October 10, 2017 at 5:50 am

A nudge presupposes an Elite of the Wise and Good who know what is best for us and are determined to make sure we do it. Most of us out-grew that in our teens and have little desire to return to a state of infanthood. Conservatives in particular are wary of people with mostly useless pieces of paper in the mostly useless social sciences that they seem to think makes them the Elect of God and entitled to boss the rest of us around. Conservatives in particular think that these people are harmless cranks if they are left in state institutions where they can do little harm, like universities.

Conservatives tend to think that when these people start passing undemocratic laws they should be hung by the neck until dead.

I find it hard to fault that logic. Rule by Philosopher Kings has not been a dream of the Conservative movement. Ever. It has very much been a dream of Leftists. Which is why Marxism is so strong on campuses.

You may well find it hard to package dog sh!t as Mom’s Apple Pie and sell it to most people.

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81 albatross October 10, 2017 at 9:03 am

Before evaluating any proposed government power or action, it’s a good idea to think about how it will work out when people you despise (or who despise you) are in power.

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82 So Much For Subtlety October 10, 2017 at 9:22 am

People who despise me are in power.

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83 msgkings October 10, 2017 at 12:16 pm

They always will be.

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84 Anonymous October 10, 2017 at 3:24 pm

We laugh at those who said it in the past.

85 Tanturn October 10, 2017 at 10:28 am

I disagree. Just because we oppose the current elite doesn’t mean we should accept whatever exercise of freedumb The People want to do. Why shouldn’t the government nudge people away from being obese, for example?

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86 Yteltbus Rof Hcum Os October 10, 2017 at 11:31 am

A nudge presupposes an Elite of the Wise and Good who know what is best for us and are determined to make sure we do it. Most of us out-grew that in our teens and have little desire to return to a state of infanthood.

Get out more. The problem with your line of thinking is that the common people are, on balance, even more foolish, incompetent, and short-sighted than the elite. Incompetence, not competence, is the norm. The autodidactic, omni-competent everyman who prospers by his inherent wisdom and righteous intuition is a myth. Doesn’t exist. Never has. Never will.

Humans are inherently social and hierarchical. The emergence of some kind of elite in any society is inevitable. Elites codify norms and establish institutions to enforce those norms. The quality of any society is ultimately determined by the quality of its elites. If the elites are shit, the society will be shit.

The solution isn’t no elites; the solution is more competent elites. So, how to improve elite competency?

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87 msgkings October 10, 2017 at 12:17 pm

+1

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88 shrikanthk October 10, 2017 at 6:59 am

We think alike! I was making a conservative case for nudging with a couple of friends of mine a week ago! Now I have some support.

Most traditional societies operate on nudging. I am from India, a society that arguably relies more on nudging than the rule of law. Nudging keeps India going. And keeps the country remarkably peaceful and low-crime, notwithstanding the insane levels of heterogeneity.

The whole caste system is an edifice built on nudges! There is no law enshrining it. There has never been. Even in ancient India. Yet Indians are nudged into honoring it.

Our food habits are an outcome of nudging! We have achieved the impossible goal of rendering 40% of population vegetarian, purely as a result of social nudges. Something that arguably no other society has managed to achieve in human history.

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89 Lanigram October 10, 2017 at 10:58 am

How does the state nudge Indians into pooping into a waste treatment system instead of pooping on the ground out in the open?

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90 rayward October 10, 2017 at 6:59 am

According to David Brooks, Cowen is among the “beacons of intellectual honesty today”. https://www.nytimes.com/2017/10/10/opinion/the-art-of-thinking-well.html In his column, Brooks distinguishes the “Inner Ring” from those opposed to them, the latter adopting slurs (e.g., “cuckservative” and “whitesplaining”) to signal to other outsiders they they are fellow members in the outside group. Brooks: “Their motto is, “We Are the Few, the Proud, the More or Less Constantly Appalled at Everyone Else.”’ Words matter, especially slurs, which, when spoken or written by celebrities, spread like the wildfires in California, unleashing all manner of anti-social behavior. But all is not lost, at least according to Brooks. Intellectually honest people, people such as Cowen, can persuade people to be reasonable, can “create groups where it’s cool to be reasonable”. I suppose that’s the purpose of this blog. Of course, not all readers of this blog share Brooks’s view, including his admiration for Cowen’s intellectually honesty. I do.

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91 blah October 10, 2017 at 9:56 am

Whom do commenters here try to respond more reasonably to: Tyler or Alex? I would think the latter. There are certain issues where Tyler decides to be provocative, certain groups he targets; you may not notice how provocative he is unless you disagree with him on such an issue.

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92 Willitts October 10, 2017 at 11:12 am

My problem is that Tyler, who I consider a genius, sometimes writes as if his teenage child is doing the writing. I applaud self-examination, especially on this blog. But an opinion column in a newspaper with many opponents and impressionable readers is not a place to do soul searching.

It appears his friendship with technocrats is getting the best of his reason. Economists do tend to want us closer to efficient solutions, but not every manner and goal is lawful. The invisible trade-off is the erosion of the rule of law, property rights, and freedom.

The best kind of nudge is stepping out of the way to let poor choices be crushed by consequences. The glue of wisdom in our society has been melted away.

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93 Sttilliw October 10, 2017 at 11:42 am

The best kind of nudge is stepping out of the way to let poor choices be crushed by consequences.

…and when the majority of the population makes those poor choices and gets crushed by the consequences, lowering quality of life for society overall?

To put it another way, how much are you willing to suffer to indulge other people’s stupidity?

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94 Willitts October 10, 2017 at 1:49 pm

There is still room for laws, but as I said elsewhere, laws aren’t nudges. They are forceful shoves and threats.

Forced retirement savings is a good example of resolving moral hazard. This isn’t necessarily legal according to our constitution, but it’s a good example of a worthwhile shove.

Public service announcements about saving might be a good nudge, but I doubt the benefits would exceed the costs because the allure of moral hazard is too strong. However, if we simultaneously passed an amendment forbidding social assistance to the elderly who didn’t save, this is stepping out of the way to remove the fruits of moral hazard.

I’m not arguing for or against these types of policies, but discussing nudges and laws in the context of policy and economics.

95 Guy Makiavelli October 10, 2017 at 12:00 pm

Of course, not all readers of this blog share Brooks’s view, including his admiration for Cowen’s intellectually honesty. I do.

Which Tyler Cowen is the one whose honesty you admire? the exoteric TC or the Straussian esoteric TC?

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96 shrikanthk October 10, 2017 at 7:06 am

Is it fair to say the word “bastard” is a nudge against unwed pregnancies? Its disuse in the past 30-40 years has been accompanied by a boom in unwed pregnancies.

We still do retain cuss words in pop culture that serve as a nudge against incest.

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97 Willitts October 10, 2017 at 11:04 am

Good example. Peer pressure is a nudge?

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98 shrikanthk October 10, 2017 at 11:52 am

Ofcourse.

Terms like 47%, “basket of deplorables” are also nudges that induce shame in the non productive elements of society and prompt hopefully a change of mindset in some

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99 Willitts October 10, 2017 at 1:53 pm

OK, a nudge in a broad sense. But I think of a nudge from the standpoint of a policymaker in power leading the populace in a desired direction, not as a competitive strategy of a political foe.

I said earlier that Tyler’s use of nudge seems to lose contrast. This conversation is telling me that nudge is not well defined to begin with. I’ve seen a half a dozen different interpretations.

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100 chrisare October 10, 2017 at 7:11 am

I think where nudges lie on the political spectrum depends on where the lie between strong and weak.

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101 Cambias October 10, 2017 at 7:51 am

I think one reason people distrust the “nudge” idea is that it’s fundamentally undemocratic.

In a democracy, the entire government — from Donald Trump to the guy who pumps out the septic tanks at Guantanamo — are the employees of the electorate. They work for us. They are supposed to make policy to reflect the will of the sovereign; i.e. the people. Once these hirelings start trying to change our behavior and influence what we think, they are no longer working for us but for themselves.

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102 Tom West October 10, 2017 at 8:25 am

> Once these hirelings start trying to change our behavior and influence what we think, they are no longer working for us but for themselves.

Au contraire! If the majority of the population wants a minority to change their behaviour, then one could make the claim that they are exercising the will of the people.

Whether they *should* be exercising the will of the people in this instance is a different question.,

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103 Kevin E. October 10, 2017 at 9:41 am

+1

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104 Willitts October 10, 2017 at 11:03 am

Not merely undemocratic from a philosophical standpoint but also likely a violation of due process of law. A default election that diminishes an employee’s paycheck is arguably unconstitutional. First, there is no law passed by a legislature to make such a mandate. Second, there is a deprivation of property. I suppose if there is an enrollment period, people will argue that there is notice and opportunity to respond, but I don’t think that would survive a legal challenge. If a government agency did this, it might violate the administrative procedure act.

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105 Lanigram October 10, 2017 at 11:12 am

Cambias

“They work for us.”

Yes. Let’s fire them.

Here are some quaint words that I still like:

“…unalienable rights…to secure these rights, governments are instituted among men…deriving their just powers from the consent of the governed…”

They don’t teach US history in school anymore, except for one class in high school. My kids first exposure to US history was in 5th grade and took the form of a book by Zinn. Better to keep them ignorant until university. Maybe the “too cool for school” kids are better off. Maybe it’s better to go from zero to Federalist #29 and #46 than Zinn to Marx.

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106 DanC October 10, 2017 at 8:05 am

First, current paternalistic regulations around pension plans have led employers to offer high fee, lower return options that conform with excessive regulatory nonsense. A nudge to default into the best bad plan is not a substitute for informed consumers or designing a system that allows for more choice and more competition i.e. more freedom. Rather then looking for second best solutions, we should offer real choice. Allowing people to blindly opt into something they don’t really understand (especially the fees and partly hidden regulatory costs) does not help generate real competition and real choice. Nor is helping make the process even less transparent, in my opinion, is less helpful toward the goal of helping people save for retirement.

Next “our government doesn’t allow marriage contracts…” On first take that sentence makes me shutter a bit. In any case, marriage contracts are written that way because that is the way the vast majority want it. Plus when you add a prenup to the contract aren’t you really signing a contract with options as to term. If government really wanted to help keep people married at all cost wouldn’t they refuse to allow prenup contracts. How about palimony lawsuits? Common-law marriages are allowed in some states and are recognized by the IRS. I don’t view marriage contracts as a nudge by the government but as a response to consumer demand, a response that is flexible to changing conditions and attitudes.

At least some of the debate about immigration is that allowing immigration into our “social net” is more expensive then it was in the past. Having immigrants enter didn’t cost us much so it didn’t make sense to spend much to stop it. (If we were as racists a society as some like to claim, we might have taken steps to preserve racial “purity”). Put calling immigration regulations a nudge seems to be stretching the term. Every tax and regulation becomes a nudge. In which case I wonder if you are ready to defend the efficiency of every tax and regulation.

Our whole court system is based, at least in part. on the notion that we have a way to settle differences without violence. It would appear that avoiding violence is expensive, confusing, sometimes blind, and the nudges are frequently coercive. Perhaps the nudges of the EPA are paternalistic and helpful. Or they are written and enforced by imperfect people increasingly unanswerable to any put themselves.

Nudges related to abortion, in your terms, is really about attempts to get around a law that some oppose. For me it is less about economic nudges then using the courts and regulations to weaken the power of a central government that has imposed laws that a local community opposes. What happens when opposing sides each try to impose their “nudges.”

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107 The Other Jim October 10, 2017 at 8:19 am

It’s great when Ty reveals himself to be utterly dead wrong in the very first sentence.

>Society is unwilling to resort to outright, direct coercion …. to keep people from immigrating illegally.

Not sure if you heard, big guy, but Hillary Clinton lost the most historic election of all time to Donald Trump — a man who is now your President specifically because he promised to use coercion to keep people from immigrating illegally.

But please, do continue to pontificate on “society.”

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108 prior_test3 October 10, 2017 at 8:28 am

And she lost that election while having literally millions of voters more choose her than Trump.

Which is one of the things that makes the 2016 election so historic, after all.

Not that there is the slightest doubt she lost, of course – it is simply that more Americans actually voted for Hillary in 2016, and in your framing, this means that the majority of those voting in 2016 apparently did not want to see the government using ‘coercion to keep people from immigrating illegally.’

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109 albatross October 10, 2017 at 9:10 am

Also, ICE would still be employed and doing occasional raids even had Hillary won the election, just as they were under Obama. Open borders aren’t really on the table from either party, though the rhetoric used to talk about immigration policy is fuzzy (and schmaltzy) enough that it’s probably easy to pretend that somehow the Democrats will enact open borders if elected.

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110 Christian Hansen October 10, 2017 at 11:10 am

He means American society by which he means a combination of maternalist Democrats and chamber of commerce Republicans. Very few societies in the world are good with open immigration. Just look at our neighbors up north. The USA is a huge outlier here.

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111 prior_test3 October 10, 2017 at 12:04 pm

So, freedom of movement in the EU for EU citizens – open borders or something else?

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112 Where is the doctor? October 10, 2017 at 8:47 am

Would an abortion clinic on every corner be enough to consider the government not “nudging” individuals away from abortion, Mr. Cowen?

I don’t have a strong opinion on abortion, but the logic used in Mr. Cowen’s argument is risible. Is terrible customer service at the local DMV an attempt to nudge me away from renewing my driver’s license? Maybe the terrible service is part of the government’s “nudge” to keep people off the roads so government does not need to spend as much on public infrastructure and that will help keep taxes lower for the bureaucrats/elites. That must be it.

Please see through my sarcasm.

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113 Art Deco October 10, 2017 at 9:00 am

Actually, we do have the resources to keep people from immigrating illegally. It’s just that open-borders advocates pretend we do not, some because they’re dishonest and some because they’re biased and think nothing through.

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114 albatross October 10, 2017 at 9:16 am

There’s a grain of truth to the claim here. We can’t practically prevent 100% of illegal immigration, not without paying all kinds of unacceptable prices in terms of surveillance and personal freedom. Even with serious enforcement, there will be some people here illegally.

But preventing the great majority of illegal immigration, no longer having ten million people here illegally, no longer having entire industries dependent on illegal immigrants for their labor force–all those are entirely within our means. They may not be *politically* workable, but there’s certainly no practical reason why we can’t make the fines for hiring illegal immigrants high enough that it becomes a bad business decision to do so, and enforce those laws often enough that economically motivated illegal immigration to the US shuts down.

But this debate is kept fuzzy (probably intentionally so) even at the highest levels, so it’s easy to get the two statements mixed.

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115 Willitts October 10, 2017 at 10:57 am

The magic words in Trumps campaign were “self deport.”

We probably have limited capacity to stop people dedicated to getting here illegally, but we can make the process so inhospitable to them that they choose to leave or never come. Something as simple as asset forfeiture for deportees. Heavy fines for employers. Constant raids. Surveillance of remittance payments.

I’m not necessarily suggesting or condoning any of these, and possibly some are illegal. I’m merely making the point that stopping illegal immigration isn’t just forming a physical or metaphorical wall but a defense in depth.

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116 Frederic Bush October 10, 2017 at 9:27 am

A nudge is something that would not affect a perfectly rational actor but does affect us illogical human beings. Things having to do with wording choices, defaults, opt-ins, etc.

Making people travel hundreds of miles for an abortion is a cost that will affect even economists. ICE can deport you arbitrarily if you encounter them no matter what kind of logic you deploy. The town clerk can’t issue you a short-term marriage contract even if you ask in your most rational voice. Etc. None of these things are nudges.

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117 Kevin E. October 10, 2017 at 9:45 am

+1

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118 Tanturn October 10, 2017 at 11:26 am

“A nudge is something that would not affect a perfectly rational actor but does affect us illogical human beings.”

Not necessarily. “Do what others do” can be traditional when you don’t have the time or ability to analyse a choice yourself.

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119 Jake October 10, 2017 at 9:59 am

This may have been covered already but those examples aren’t nudges. A nudge imposes a trivial cost (e.g. checking a different box to opt out of 401k) or invokes social norms to re-frame the problem (e.g. sending a letter saying 99% of Americans pay their taxes on time). A nudge doesn’t materially change the budget constraint of the agent but still moves the agent to make a “better” decisions by exploiting behavioral biases.

The examples of border control and divorce materially impact an agent’s budget constraint and thus aren’t nudges.

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120 Willitts October 10, 2017 at 10:21 am

The article borders on incoherent because of the lost contrast of the word “nudge.” From the examples, “nudges” would include every form of incentive for people to obey the law. The law, and consequences for breaking them, are not “nudges” but forceful shoves and threats.

But what makes laws and punishment just is due process. They are passed by the majority of legislatures, and there are processes to make sure enforcement is done fairly.

Not so a nudge. A nudge is an incentive provided without much in the form of formal lawmaking and without much process to prevent errors in application. The proposed “default” of full coverage deprives the person of property without due process. It is permissible to FORCE an employee to make an election, but it is never permissible to make a choice that takes away property without their consent. This violates the constitution.

Nudges are, always and everywhere, a sinister plot by paternalistic technocrats. Differentiate that, though, from an active government campaign to warn people of the dangers of drugs or speeding. While these look like nudges, they are not because the law has already proclaimed these behaviors as illegal and has enforcement measures in place. The ad campaign is punctuating a lawfully instituted policy – nothing more.

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121 Ricardo October 10, 2017 at 10:53 am

“While these look like nudges, they are not because the law has already proclaimed these behaviors as illegal and has enforcement measures in place. The ad campaign is punctuating a lawfully instituted policy – nothing more.”

That doesn’t provide an especially clear distinction. Preventing the spread of infectious diseases is an unambiguous responsibility of the government — nudges aimed at the same are surely just punctuating lawfully instituted policies and long-standing social consensus on the government’s responsibility in this area. It isn’t much more of a stretch to make the same argument for the physical fitness of young people. We still insist that all young men register for the draft and the military has certain targets to meet for voluntary recruitment so nudges aimed at health and physical fitness for young people arguably have a relationship to the unambiguous responsibility of the government to maintain the armed forces.

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122 Christian Hansen October 10, 2017 at 11:12 am

I was thinking about it and I guess Tyler is distinguishing between passing laws and enforcing them. If you don’t enforce a law, then it is a nudge.

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123 Jake October 10, 2017 at 11:15 am

Nudges aren’t incentives, they are a way of “re-framing” economic decisions. I’m not a huge fan of them either but you’re building a straw man. A proponent of nudges would say that there is always an implicit nudge (i.e. frame) for every decision so why not frame decisions to steer agents toward a “pro-social” behavior.

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124 Peter October 10, 2017 at 10:33 am

The most disappointing piece I’ve read from Tyler in awhile. It seems that Tyler made two obvious mistakes. Neither the immigration case nor the abortion case are nudges since the government attaches significant costs to one of the options. In the immigration case, there are significant costs to illegally immigrating into the U.S., namely criminal sanctions. And in the abortion case, there are significant costs when someone has to take time off work (perhaps lose their job) and pay to travel hundreds of miles to have an abortion done. Nudges are part of libertarian paternalism. The libertarian part of this requires that the choice architect not attach significant costs to any of the options. Of course there might be significant costs attached to one of the options, but to be a nudge and not be coercive, it is necessary that the significant cost not be put there by the choice architects (e.g. early death with smoking). This is all pretty basic, and Tyler seems to get it wrong.

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125 Mike W October 10, 2017 at 10:39 am

Oooo, you said “abortion”…you’re going to get some heated responses on the Bloomberg comment board.

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126 Plumpkin October 10, 2017 at 1:03 pm

Sometimes I get frustrated with this comment board, but it’s an intellectual paradise compared to that place.

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127 Hazel Meade October 10, 2017 at 11:39 am

I find the nudge concept insidious.
It is a kind of coercion that disguises itself as non-coercion. Much like the ACA’s “tax penalty” on not having insurance. You can regulate and control far more than you let on just by making it very costly to behaving in the undesired manner. What are import tariffs, after all, if not “nudges” to purchase American-made products? If we slapped a 100% import tariff on Japanese cars, advocates would say “Nobody’s saying you CAN’T buy a Japanese car, you’ll just pay twice as much for it!”
The list is endless, and there basically nothing that cannot effectively be banned or mandated under the pretense that the added expense brought about by the nudge isn’t “really” coercive.

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128 msgkings October 10, 2017 at 12:24 pm

Again, the word nudge has a meaning and it’s not ‘added cost’. Peter is right just above us here.

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129 anon October 10, 2017 at 12:25 pm

You just need to stick to Thaler’s definition, and when you see something that is not a free and open choice say “that is not a nudge!”

Taxes sure as hell are not Thaler’s nudges.

(Tyler did contribute some confusion in his examples.)

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130 Hazel Meade October 10, 2017 at 12:50 pm

Ahh, I see.

Still I wonder if the “nudges” would gradually drift towards added costs, via mission creep and so forth. It would be easy for politicians to redefine and it provides a window for them to claim that various indirect costs (i.e. having to drive 100 miles to get to an abortion clinic), aren’t *really* costs, and aren’t really coercive. The definition of what counts as nudge could broaden over time to encompass significant costs.

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131 anon October 10, 2017 at 12:57 pm

I would not see “you can’t do that on our state!” as a Nudge, no.

And I am fine with everyone policing “nudges” to make sure they are not restrictive or coercive.

(California’s gambling restrictions are not really a “nudge” to go to Law Vegas!)

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132 anon October 10, 2017 at 12:43 pm

Another example of Thaler preferring choices that are open and free:

https://twitter.com/R_Thaler/status/915658741017608192

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133 Jack October 10, 2017 at 4:01 pm

I didn’t get past the point on marriage — in fact there are large financial incentives in favor of divorce as anyone who has had an experience with the matrimonial system knows — which is probably a major reason why so many marriages end in divorce.

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